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29 Sep 2019
Consider the AD-AS framework suppose gov't spending is increased when we are in a liquidity trap and the FED does not target the IR.. assume expected inflation is always zero
1. show what happens in an IS-LM and AD-AS graph in the period Gov't spending increases, and output ends up above potential GDP and out of a liquidity trap. Then show what happens to output, the PL, and IR over time
Consider the AD-AS framework suppose gov't spending is increased when we are in a liquidity trap and the FED does not target the IR.. assume expected inflation is always zero
1. show what happens in an IS-LM and AD-AS graph in the period Gov't spending increases, and output ends up above potential GDP and out of a liquidity trap. Then show what happens to output, the PL, and IR over time
1
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watching
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Chika IlonahLv10
29 Sep 2019